Home Buying in California>Question Details

Carlos, Home Buyer in 95206

$7,400 for closing costs seem very steep for a $110,000 home we are in contract in.

Asked by Carlos, 95206 Sun Aug 30, 2009

We are not trying to loose this house because of the closing costs, but that seems like we are being taken advantage of. We have been putting in offers for about 7 months and finally got an offer accepted. I thought the average for closing cost would be around 3% of the purchase price. What can we do? we have not talked to our lender yet but will soon, just don't want to make this the deal breaker. The seller is putting in 5000 for closing costs but just because of that doesn't mean our lender should increase closing costs. We are putting 20% down if that makes any difference.

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Answers

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Carlos: You are are paying 2 points on this loan. You should be paying one point. Throw out broker application fee and administration fee. Those are junk fees.

Ask if you can get renegotiate your locked rate (which seems high).

You can and should (even at this point in the loan process) try to get the broker to give you a better deal than this.
Janet Guilbault
Mortgage Banker/Broker
RPM Mortgage
925-212-6347
0 votes Thank Flag Link Mon Aug 31, 2009
Hi Carlos,
You should be getting a good faith estimate on closing costs from your lender. You are free to shop around for better prices on closing costs, as they do vary greatly!
0 votes Thank Flag Link Mon Aug 31, 2009
Carlos,

These fees can be changed the other costs are set.

broker credit report- 35 $25.00 is average
broker processing fee-500 Okay
broker loan fee-1,760 In todays market should be $1,100.00
broker administration fee-595 Okay
broker application fee-595 Padding their pockets.

I have a feeling the lender is getting paid a Yield Spread Premium by giving you a Rate of 5.875%
Tell the lender that you want to buy the rate down by one point. Don't listen to there excuse, if you discount the rate, they have to give you below par pricing. Even if the loan is locked you can buy your rate lower. It will also lesson the amount they can charge. I think this loan will get section 32 to $5280.00
0 votes Thank Flag Link Sun Aug 30, 2009
Carlos,
I used to be in lending and occasionally still assist people with questions on this very same thing.
The fees are reasonable EXCEPT for the broker admin fee and broker application fee which in my old office we would have called junk fees and we never charged them The other fee that seems a little high is the title insurance especially for such a small purchase amount. Your lender may have estimated a bit high just to be on the safe side. I also don't see impounds for your taxes...are you doing that or paying your taxes on your own? Just don't want you to get hit with that if you weren't planning on it.

And IMHO that rate seems a bit high, but you could have been locked in during the last small spike in interest rates. Not sure when you are supposed to close but if you have time you may indeed want to check what another lender may charge. BUT I recommend you speak to your lender and have him/her explain this in detail to you.
Also be advised that since HVCC was implemented, moving your appraisal to another lender won't be an option to my understanding so you would incur the additional expense of another appraisal if you did go to another lender.

Hopefully you can work it out with your current lender and reach a satisfactory agreement.

All my best,
Micki
0 votes Thank Flag Link Sun Aug 30, 2009
Carlos,

I used to be a Loan Officer for a Mortgage Broker. If you are paying discount points to buy a lower mortgage rate, that is one thing, but $7400 seems steep. I can email you some Lender Contacts. Who do you bank with? Is this home purchase a non-distressed sale, or an REO, or Short Sale. If you are doing Conventional Financing use Provident Funding, or Fremont Bank. For FHA Flagstar is good. Even Chase, Wells Fargo, Bank of America, and Propsect Mortage offer good rates with competitive lender fees. Unless your credit is marginal, you may consider switching lenders.
0 votes Thank Flag Link Sun Aug 30, 2009
i did get the loan documents through mail and a good faith estimate was included. here is a list of whats being charged:

appraisal-390
lender fee-795
tax service- 84
flood check fee-26
broker credit report- 35
broker processing fee-500
broker loan fee-1,760
broker administration fee-595
broker application fee-595
hazard insurance premium-264
30 days interest at $14.16 a day-424
closing or escrow fee-505
Title insurance-1,160
courier/express mail-closing-65
recording fees-90

for a total of $7,288 the loan is unconventional uninsured for 30 years at a 5.875% interest rate
0 votes Thank Flag Link Sun Aug 30, 2009
Where are you getting the estimate for the closing costs? Your lender should also give you a good faith estimate that is more acccurate. Are you paying points on your mortgage? Talk to at least two lenders, compare fees, and go from there.
Web Reference: http://cindihagley.com
0 votes Thank Flag Link Sun Aug 30, 2009
Cindi Hagley, Real Estate Pro in San Ramon, CA
MVP'08
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